The math: ACTC = (Earned Income - $2,500) x 15% up to max of $1,500 per kid. But only kicks in if regular CTC doesn't cover everything

This is super helpful! I was in the exact same situation last year and was so confused by the ACTC calculation. One thing that helped me understand it better was looking at Form 8812 (Additional Child Tax Credit worksheet) - it breaks down all the steps they use. The key thing I learned is that ACTC only applies when your regular CTC exceeds your tax liability, so you're basically getting the "leftover" credit as a refund. It's actually pretty generous once you understand how it works!

Another angle to consider - if your mom's $130k contribution is structured properly, you might be able to treat it as a loan rather than a gift, which could provide additional tax benefits. You could charge her a minimal interest rate (the AFR - Applicable Federal Rate) and she could make small monthly payments back to you. This approach would let you deduct the mortgage interest on the full $350k purchase price while avoiding gift tax implications on the $130k. The interest income you'd receive from her would be minimal and likely offset by the additional deductions you could claim. You'd need to document this properly with a formal promissory note, but it might be worth exploring alongside the rental strategy others mentioned. The key is making sure any arrangement has legitimate business purpose and proper documentation - the IRS looks closely at family transactions to ensure they're not just tax avoidance schemes.

One important consideration I don't see mentioned yet is the potential impact on your mom's Medicare and Social Security benefits. While the rental arrangement with gifted payments might work well for tax purposes, you'll want to make sure the "income" from rent (even if immediately gifted back) doesn't inadvertently affect her Medicare Part B premiums or trigger any means-testing issues. Also, since you're in a high tax bracket, have you considered the timing of when to start claiming depreciation on the property? You might want to delay rental treatment for the first year while getting everything properly documented and established, then switch to rental treatment in year two when you can maximize the depreciation benefits against your consulting income. The $130k contribution from her home sale is definitely something to document carefully - whether you treat it as a gift, loan, or partial ownership interest will have different implications for your basis in the property and potential future capital gains treatment.

I was in the same boat last year! One thing nobody mentioned yet - you can actually use the free filing options through the IRS website if your income is under certain limits. I used FreeTaxUSA and it walked me through the Schedule C stuff for my etsy shop. Took like 20 minutes.

I used FreeTaxUSA which is completely free for federal returns (you only pay like $15 for state if needed). Unlike TurboTax which tries to upsell you the moment you mention any business income, FreeTaxUSA includes Schedule C and Schedule SE in their free version. The interface isn't as fancy as TurboTax but it gets the job done. It walked me through all the self-employment stuff and helped me identify deductions I could take for my art supplies and equipment. Definitely saved me from paying those ridiculous fees that other tax software charges for "premium" features that should be standard. Just make sure you have all your income and expense records organized before you start - the software is only as good as the information you put into it!

Something else to consider - you might be eligible for a whistleblower reward if the IRS collects taxes based on your information. If the amount exceeds $2 million, you could get 15-30% of what they collect. Even for smaller amounts, you might still get something. Just use Form 211 instead of or in addition to Form 3949-A.

I reported my previous employer for almost the exact same thing in 2023. They were calling everyone "contractors" even though we worked regular 9-5 schedules in their building using their equipment. Make sure you document EVERYTHING before you leave - copies of schedules, emails about your duties, anything showing they controlled how/when you worked.

This is exactly the kind of complex tax situation where having proper documentation from day one is crucial. I've seen too many businesses get into trouble with the IRS because they didn't establish clear policies upfront. A few additional considerations that might help: **Allocation Method**: Consider using a "days available" method to allocate costs. If the suite is available 365 days per year, but only used for entertainment 50-60 days, you might be able to argue that a larger portion should be treated as facility rental rather than entertainment. **Business Purpose Documentation**: Create a standard form for each suite usage that captures: date, attendees, business purpose, topics discussed, and outcomes. This becomes invaluable if you face an audit. **Separate the LLC's Books**: Make sure the LLC maintains separate books and records. Each member company should receive detailed K-1s showing their share of different types of expenses (facility rental vs. entertainment). **Consider Revenue Recognition**: Since you mentioned the LLC will have some revenue from reselling unused tickets, make sure you're properly accounting for this income and how it affects the overall deduction calculations. The fact that you're asking these questions upfront puts you way ahead of most businesses. Document everything, work with a qualified CPA, and you should be in good shape. The key is being able to demonstrate legitimate business purpose for the arrangement.

This thread has been incredibly helpful - thank you all for sharing your experiences! I'm seeing a pattern here that proper documentation and allocation methodology are absolutely critical for these suite arrangements. One thing I wanted to add that hasn't been mentioned yet: consider the optics and "reasonableness" test from the IRS perspective. Even if you follow all the technical rules perfectly, luxury suite expenses can still draw scrutiny simply because they seem excessive for smaller businesses. To strengthen your position, I'd recommend: 1. **Comparative Analysis**: Document that the suite arrangement is actually more cost-effective than alternatives (hotel meeting rooms, catering venues, etc.) when used for legitimate business meetings 2. **Industry Benchmarking**: If your industry commonly uses entertainment for client relations, document this as standard business practice 3. **Revenue Connection**: Track and document any actual business generated from suite usage - new clients, deals closed, partnerships formed, etc. 4. **Professional Appearance**: Make sure the suite usage supports your business image and client expectations in your industry The IRS will often challenge luxury expenses not just on technical grounds, but on whether they're "ordinary and necessary" for your specific business. Having a clear business case beyond just tax optimization will serve you well if questioned. Also, since you're in Michigan, be aware that the state may have different rules about what constitutes deductible entertainment expenses, especially if any of the member companies are professional services firms subject to additional restrictions.